Kansas City Southern is headquartered in Kansas City, Missouri. Annual revenues as of 2007 were US$1.7 billion with 6,485 employees, and a market cap of roughly US$5 billion.[2] As of first quarter 2008, KCS's CEO was Michael R. Haverty. As of August 1, 2010, Dave Starling was named the new CEO of KCS, having been both a close friend of Haverty and an important spokesperson to the railroad since 2008.[3][4] Kansas City Southern company stock trades on the New York Stock Exchange under the symbol KSU.

Contents

Subsidiaries1

History2

Awards and recognition3

Restatement4

Controversy5

Pop Culture6

Company officers7

See also8

Notes9

References10

External links11

Subsidiaries

Gateway Eastern Railway Company (GWER) is a wholly owned subsidiary of KCS. GWER provides rail service over approximately 17 miles (27 km) of track in the East St. Louis, Illinois area.[1]

Kansas City Southern de México (KCSM), formerly Transportación Ferroviaria Mexicana (TFM), is the name of a company dedicated to freight transportation using rail in the north eastern part of Mexico. KCSM is indirectly owned and operated by Kansas City Southern Industries via NAFTA Rail, S.A. de C.V. KCSM owns its own fleet and the rights to operate and maintain a rail system through a concession from the Mexican government. KCSM's rail system consists of 2,645 track miles in a 17 state region (including the federal district), which serves northeastern and central Mexico and the port cities of Lázaro Cárdenas and Tampico, among others. KCSM provides KCS with key routes for handling goods imported into North America. It also has a Pacific coast route to the recently developed deepwatercontainer port of Lázaro Cárdenas.[5]

NAFTA Rail, S.A. de C.V. is the holding company for KCSM because at the time KCS purchased KCSM , the Mexican government would not allow a foreign entity to directly own a Mexican railroad. KCS created this Mexican corporation as a holding company for KCS' ownership in KCSM. NAFTA Rail is wholly owned by Caymex Transportation, Inc., which is owned by KCS.[1]

Southern Capital, Development, and Industrial Services Companies: The Southern Capital company consists of bulk storage facilities complete with ocean terminals (Pabtex) along with a tie and timber plant (Trans-Serve, Inc., also known as Superior Tie and Timber). The Southern Development Company is a holding company that owns various properties. The Southern Capital Corporation, LLC is a leasing company owned jointly by KCSR and GATX Capital Corporation of San Francisco, California, Southern Capital Corporation has the rail assets that once belonged to Carland and KCSR, as well as the loan portfolio once owned by Southern Leasing Corporation.[1]

The Texas Mexican Railway Company (TexMex) is wholly owned by KCS. TexMex consists of a 157-mile (253 km) railway that connects Corpus Christi, TX to Laredo, TX. TexMex also owns 400 miles (640 km) of Union Pacific trackage rights that spans from Beaumont, TX to Robstown, TX. With its trackage rights and physical railway, the Texas Mexican Railway connects KCSM and KCSR at Laredo, TX and Beaumont, TX. TexMex also owns the extremely important Texas-Mexican Railway International Bridge. It is the only rail bridge that connects the United States with Mexico through Laredo, and 40% of all rail traffic that travels to Mexico, crosses over this bridge. Without TexMex, it would be nearly impossible for KCSR and KCSM to act as a single company under Kansas City Southern.[1]

KCS also owns a handful of non-core businesses. These minor subsidiaries, holding companies or minority investments (investments in which KCS has less than 50 percent ownership), have few employees and serve to support the rail operation. These include Canama Transportation, Caymex Transportation, Inc., Rosenberg Regional LLC, Joplin Union Depot, Kansas City Terminal Railway, Port Arthur Bulk Marine Terminal Co. and Veals, Inc.[1]

In 1940 KCS reported 1345 million net ton-miles of revenue freight; L&A had 778 million. Together they operated 1760 miles of road at the end of 1940, not including Arkansas Western and Ft Smith & Van Buren; at the end of 1970 KCS/L&A operated 1672 miles of road on 2695 miles of track.

In 1962, under the name Kansas City Southern Industries, Inc. (KCSI), the company was formally organized as it began to diversify its interests into other industries under the CEO William Deramus III. The new KCSI focused primarily on the financials industry, along with the rail industry. In 1969 KCSI started the two largest companies that came out of the diversification, DST Systems and Janus Capital Group, which was known as Stilwell Financial at the time.[7][8] DST Systems is a software development firm that specializes in information processing and management, with the goal of improving efficiency, productivity, and customer service.[9] Janus Capital Group is a finance firm that provides growth and risk-managed investment strategies.[10]

The 1990s also saw KCSI expand into Mexico with the acquisition of partial interests in the Texas Mexican Railway (TM) and Grupo Transportación Ferroviaria Mexicana (TFM). TFM was created when Kansas City Southern Industries and Transportacion Maritima Mexicana (TMM) purchased a government concession to operate a rail system in Mexico. It was the most sought after portion of the Mexican railroad concessions, called the Northeast Railroad, that was purchased by KCSI and TMM. The concession was also bid on by many other major companies, including the United States' largest railroad, Union Pacific Railroad. KCSI and TMM bid on, and won, the concession for $1.4 Billion USD, paying 49% and 51%, respectively. TMM already partially owned the Texas Mexican Railway through a previous concession from the Mexican government. TM was particularly important to KCSI because they held the link from KCSI tracks to TFM tracks via trackage rights over the Union Pacific line. Shortly after acquiring the Mexican government's concession, KCSI entered into another joint venture to purchase a government concession. On June 19, 1998 the government of Panama turned over control of the Panama Canal Railway to Kansas City Southern Railroad and the privately held Lanigan Holdings, LLC. This created the Panama Canal Railway Company (PCRC).

After these large capital outputs, KCSI needed new capital to improve the Mexican and Panamanian concessions they had purchased, and to continue to make capital expenditures in the future. To build this needed capital, KCSI spun off all assets that were not essential to the rail businesses. Doing this essentially paid off the purchase of their two existing concessions and freed up capital to improve them.[11] The first major improvement that took place was in 2000 and 2001 when the PCRC upgraded the railway to handle large, intermodal shipping containers, along with passenger transport.

In 2002 the Kansas City Southern Industries formally changed its name to Kansas City Southern (KCS) after spinning off many subsidiary businesses that were not directly related to the railroad business (the largest of which were Janus Capital Group and DST Systems).[12] In 2005 Kansas City Southern purchased TMM's share in TFM and TM, giving them full ownership of the companies. TFM was officially renamed Kansas City Southern de México, S.A. de C.V.[12] The Texas Mexican Railway retained its original name and is a subsidiary of KCS.[13]

In June 2009 the Kansas City Southern began operating on new trackage between Victoria and Rosenberg, Texas, known as the Macaroni Line .[14] The line was built in 1882 and was called the Macaroni Line because the main food for the workers constructing the line was macaroni. In 1885 it was acquired by Southern Pacific, which operated the 91-mile line until 1985; by the early 1990s the tracks were mostly torn out. In 2006 KCS announced they would rebuild the Macaroni Line (through subsidiary Tex Mex) to end the need for trackage rights on a circuitous Union Pacific route. Construction began on January 2009 and the line opened for the first trains in over 20 years by June 2009. The line now operates daily trains and has CTC signaling.[15][16][17]

Awards and recognition

The E. H. Harriman Award is an award for rail safety. KCSR has been consistently recognized for its employee safety record (in group B: line-haul railroads with between four and 15 million employee hours per year) by the E.H. Harriman Memorial Awards Institute with a Gold Award in 2001, 2002, 2006, 2007 and 2008, Bronze Award in 2003 and 2004 and a Silver Award in 2005[18][19]

Restatement

On March 31, 2004, KCS restated its financial reports for 2003, to reflect additional U.S. GAAP deferred tax adjustments at Grupo TFM. The new 10-K filing reflected an increase in net income to $12.2 million from $11.2 million reported earlier.[20] On March 17, 2006, KCS announced that certain errors were identified in the calculation of deferred income tax balances that arose in the years prior to 2003, and needed to be adjusted.[21]

Controversy

Kansas City Southern Railway was involved in a lawsuit brought in 2005 by Marcus Lee regarding race-based employment discrimination in "violation of Title VII of the Civil Rights Act and 42 U.S.C. § 1981".[22] The plaintiff alleged he was refused reinstatement based on race and that other employees of similar responsibility and disciplinary history were granted reinstatement despite their record. The case saw hearings before the Public Law Board, the Federal Railroad Administration, and federal courts. On Summary Judgment the Federal District Court ruled in favor of KCS. On appeal, the District Court ruling was upheld in part and overturned in part by the United States Fifth Circuit Court of Appeals. Prior to trial the parties reached a settlement of their dispute and the lawsuit was dismissed.

^"KCS Macaroni Line Rebuild - a set on Flickr". Flickr.com. Retrieved 2012-05-15.

^Association of American Railroads (reprinted by Norfolk Southern Railway) (May 16, 2006). "Railroads Set Another Employee Safety Record in 2005". Archived from the original on February 13, 2007. Retrieved May 24, 2006.

^Kansas City Southern (2008). "KCS Safety". Retrieved August 4, 2008.

^"KCS Files 2003 Form 10-K with SEC".

^"KCS Announces Delay in Filing of Form 10-K and Adjustment for Pre-2003 Deferred Tax Balance Error".

^http://www.ca5.uscourts.gov/opinions/pub/08/08-30444-CV0.wpd.pdf

^KCS Presidents from the website of the Kansas City Southern Historical Society

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